DOMA ruling: Taxes, retirement, estate planning

BarryC. Picker

The Supreme Court’s decision in Windsor v. U.S., has effectively struck down Section 3 of the Defense of Marriage Act, also known as DOMA, retroactively. Therefore, anyone affected can file amended joint returns for all open years. The normal Statute of Limitations is three years. So 2010, 2011 and 2012 are all open years. Also, if both spouses filed their 2009 returns on extension, that statute is open until Oct. 15, 2013.

DOMA and taxes

According to current IRS rules, the determination of whether a couple is married is based upon state law of their current residence. So a same-sex couple married in a state which allows such marriage, but now living in a state which doesn't recognize same-sex marriage may not be considered married for federal tax purposes. However, the IRS will issue guidance on this, and based upon the Administration’s reaction to the Supreme Court decision, there is a good chance that the IRS will recognize any legally performed same-sex marriage no matter where the couple currently lives.

(Editor’s note: On June 26, the IRS issued a statement on the Supreme Court’s decision on the DOMA: “We are reviewing the important June 26 Supreme Court decision on the DOMA. We will be working with the Department of Treasury and Justice Department, and we will move swiftly to provide revised guidance in the near future.” Also of note, the Obama administration has offered preliminary guidance for the inclusion of same-sex couples in federal employee benefit programs, in light of the Supreme Court’s ruling that struck down the DOMA, according to Government Executive Today. The Office of Personnel Management issued instructions for the implementation of the DOMA repeal for health benefits, life insurance, dental and vision insurance, long-term care insurance, retirement and flexible spending accounts. Same-sex spouses, as well as their children and step children, will be covered under these federal programs and “treated just as those of opposite-sex marriages,” OPM said in a release.)

A married couple is not permitted to file as Single or as Head of Household. The only options are Married Filing Joint or Married Filing Separate. While many couples will find their taxes lower now that they can file as married, others will find their taxes higher, due to the so-called marriage penalty. For 2013 and forward same-sex married couples will have to file as either Married Filing Join or Married Filing Separate even if it would be cheaper to file as Single or Head of Household. This is also true of any couple who has not yet filed for 2012. For earlier years there’s technically no requirement to file an amended return, so most people will only file an amended return if it will result in a refund. But if the IRS audits, they could change the filing status and increase the tax.

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